"The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of Axis Bank for increase in foreign investment from 49 percent to 62 percent. This is subject to the aggregate foreign institutional investors holding not exceeding 49 percent of the paid up equity share capital of the bank," an official statement said.

The approval would result in foreign investment of about Rs 7,250 crore in the country, it said. Following the inflow and hike in stake by foreign investors, the bank will become foreign-owned, whereby every future investment in seven subsidiaries will be governed by the FDI (foreign direct investment) policy, according to sources.

As per the FDI policy, downstream investment by an Indian company, which is not owned and/or controlled by a resident entity/ies into another Indian company would be in accordance or compliance with the relevant sectoral conditions on entry route.

As of June this year, foreign institutional investment (FII) holding in the bank was at 40.7 per cent, while global depository receipts (GDRs) total 8.08 percent.

The promoters of the bank are Life Insurance Corporation, General Insurance Corporation, New India Assurance, National Insurance Company and Administrator of Specialized Undertaking of the Unit Trust of India.